Telecom Order
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Ottawa, 7 January 1998
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Telecom Order CRTC 98-1
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Pursuant to the Commission's letter of 1 August 1997, the Commission received
comments, on 1 and 11 August 1997, from the Consumers' Association of Canada, the
Fédération nationale des associations de consommateurs du Québec and the National
Anti-Poverty Organization (CAC/FNACQ/NAPO), AT&T Canada Long Distance Services
Company, the Government of British Columbia, Rogers Cantel Inc. (Cantel), the Canadian
Cable Television Association, Clearnet Communications Inc., Stentor Resource Centre Inc.
(Stentor) on behalf of BC TEL, Bell Canada, The Island Telephone Company Limited, Maritime
Tel & Tel Limited, MTS NetCom Inc., The New Brunswick Telephone Company, Limited,
NewTel Communications Inc., and TELUS Communications Inc., and Vidéotron Télécom ltée,
relating to, among other matters, the appropriate definition for an eligible residential
Network Access Service (NAS), as well as the issues raised by Stentor in its letter of 25
July 1997. In their comments to the Commission, parties also addressed the question as to
whether competitive local exchange carriers (CLECs) must become CLECs in all areas in
which they offer service.
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File No.: 8638-C12-05/97
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1. In Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8), the
Commission determined that all local exchange carriers (LECs) would receive contribution
revenues from the central fund on a pro rata basis according to the number of residential
NAS served by the LECs in each band and the subsidy requirement associated with the band.
The Commission stated that residential NAS shall be defined in terms equivalent to those
in the incumbent local exchange carriers' (ILECs) tariffs. A dispute arose in the CRTC
Interconnection Steering Committee (CISC) Central Fund Sub-Working Group as to the
definition of residential NAS that should be used to determine eligibility to receive
contribution.
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2. In its comments, Stentor indicated that most parties agreed that certain elements
were necessarily part of eligible residential NAS. Stentor submitted that the only point
of contention concerning eligible residential NAS was whether or not it included unlimited
flat rate service. Both Stentor and CAC/FNACQ/NAPO contended that eligible residential NAS
included unlimited flat-rate service. Stentor argued that in Definition of Business and
Residence Service for Stentor Member Companies, Telecom Public Notice CRTC 97-30, 7 August 1997, the Commission
reinforced the principle that the portable subsidy mechanism is to be made available to
basic residential service, and in Local Service Pricing Options, Telecom Decision CRTC 96-10, 15 November 1996 (Decision 96-10),
the Commission rejected the ILECs' non-flat rated local service pricing options on the
ground, among others, that they did not provide essential elements of basic telephone
service, such as flat rate local calling.
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3. CAC/FNACQ/NAPO relied on an Order of the U.S. Federal Communications Commission
which concluded that consumers might not receive the benefits of universal service unless
a minimum amount of local usage was included within the supported services. For
CAC/FNACQ/NAPO, this meant that, in the Canadian context, the subsidy was only available
to providers offering unlimited flat rate local calling. In CAC/FNACQ/NAPO's view, the
purpose of the contribution fund (the Fund) was to ensure that the price of basic
residential local service in high cost areas continued to be affordable in the same
fashion as it is presently provided.
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4. Most other parties agreed that eligible residential NAS had to provide switched
two-way voice communications and that the method of pricing was irrelevant. They argued
that Stentor's narrower definition would restrict access to the Fund and impede
competitive entry in the local market. They submitted that, in Decision 97-8, the
Commission forbore from regulating CLECs' retail services in order to provide CLECs with
maximum service and pricing flexibility and to permit them to realize the benefits of
competition in terms of price, innovation, and services offered.
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5. Stentor also submitted that CLECs, particularly wireless service providers, had to
become CLECs in all exchanges where they provided services. Otherwise, their customers
roaming in multiple exchanges might be denied access to 911, Message Relay Service (MRS)
or their toll carrier of choice. Stentor also maintained that competitive neutrality
required that wireless carriers become CLECs in all exchanges where they provide service
in order to interconnect with other LECs, as was required from wireline CLECs. Finally,
Stentor submitted that wireless carriers electing to become CLECs in high cost areas only,
could draw a disproportionate share of subsidy from the Fund while avoiding payment into
the Fund for toll
traffic routed through their networks in low cost areas.
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6. In their comments, parties representing potential CLECs rejected Stentor's
contentions, arguing that requiring carriers to become CLECs in all exchanges where they
provide service would undermine the Commission's objective of promoting competition and
would place an undue financial burden on some carriers. They also maintained that this
interpretation would be contrary to the Decision 97-8 objective to provide carriers the
liberty to operate as CLECs on an exchange by exchange basis. In response to Stentor's
contention regarding the ability of customers to access 911, MRS and their choice of toll
provider, Cantel also pointed out that it already provided 911 and MRS. It also indicated
that it would be able to provide equal access to the same extent as any wireline carrier.
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7. With regard to the position of Stentor and CAC/FNACQ/NAPO that eligible residential
NAS must be flat rated, the Commission notes that it made no determination, in Decision
96-10, as to whether residential local service must be flat rated; rather, the Commission
examined how best to provide affordable residential local service to low income customers.
The Commission concluded that a targeted subsidy program would be the most appropriate way
to address affordability issues and rejected the specific proposals made by the ILECs.
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8. The Commission notes that in deciding to forbear from exercising its powers to
approve the rates for retail services offered by CLECs, it found that such services will
be subject to competition sufficient to protect the interests of users. The Commission
finds that requiring CLECs to offer flat rate service to be eligible to receive
contribution would be inconsistent with the Commission's determination in Decision 97-8.
Moreover, insofar as such a requirement would primarily affect the manner in which
wireless CLECs currently price their services, the Commission finds that basing a
definition of residential NAS on a flat rated pricing approach would be inconsistent with
the intention of the Commission expressed in Decision 97-8 to establish a framework for
local exchange competition that is neutral in terms of technology. The Commission notes
that since a CLEC, by definition, must comply with the conditions set out in Decision 97-8
relating to, for example, the provision of 911 service, it follows that any residential
NAS in respect of which a CLEC is eligible to receive contribution will necessarily comply
with Decision 97-8.
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9. Stentor also submitted that carriers, and in particular wireless service providers,
that elect to become CLECs, must do so in all exchanges where they operate. In the
Commission's view, such an obligation would be inconsistent with the Commission's
determination, in Decision 97-8, to permit CLECs to define their own local serving areas.
In the Commission's view, Stentor's proposal would not further the Commission's objective
of increased competition in the local exchange service market.
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10. The Commission also considers that CLECs, including wireless CLECs, need only
provide 911, MRS and equal access in the serving area or areas where they operate as a
CLEC. Stentor's contention that customers of wireless CLECs should have access to these
services wherever they roam, would impose a far greater obligation on wireless CLECs than
on wireline CLECs, and would effectively prevent wireless providers from selecting their
own CLEC serving areas. The Commission therefore finds that the imposition of such
additional obligations on wireless CLECs would not be consistent with the intention of the
Commission to establish a framework that is neutral in terms of technology.
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11. In light of the foregoing, the Commission orders that:
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a) residential NAS, in respect of which a LEC is eligible to receive contribution, be
defined as the NAS used by the LEC to offer residential switched two-way local voice
services in the exchanges within which it operates as a LEC; and
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b) carriers are not required to operate as CLECs in all exchanges where they operate.
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Laura M. Talbot-Allan
Secretary General
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This document is available in alternative format upon request.
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